An Analysis and Commentary on Federal Health Care Issues by Larry Goldberg

CMS Posts Final Inpatient Psychiatric Facility PPS Update for FY 2021

The Centers for Medicare and Medicaid Services (CMS) have issued a final rule to update the Medicare Inpatient Psychiatric Facility (IPF) Prospective Payment System (PPS) for Fiscal Year (FY) 2021. 

This final rule updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPF), which include psychiatric hospitals and excluded psychiatric units of an Inpatient Prospective Payment System hospital or critical access hospital. In addition, CMS is, as proposed, adopting more recent Office of Management and Budget statistical area delineations, and applying a 1-year transition for certain providers negatively impacted by wage index changes. CMS is also removing the term licensed independent practitioner(s) from the regulations for psychiatric hospitals. 

The rule will be published in the August 4 Federal Register. A “display” copy of the 78-page document can be downloaded at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2020-16990.pdf. This link will change upon publication. 

CMS estimates that the total impact of changes for FY 2021 payments compared to FY 2020 payments will be a net increase of approximately $95 million. This reflects a $90 million increase from the update to the payment rates ($90 million increase from the second quarter 2020 IGI forecast of the 2016-based IPF market basket of 2.2 percent, and a $0 reduction for the productivity adjustment, as well as a $5 million increase as a result of the update to the outlier threshold amount.. 

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